Week 12022 Legislative Session January 17th - 21st
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Week 1 Summary
The first full week of the 2022 General Assembly session was not very action-packed. Lots of bills remain undocketed, and it was unclear where things were headed. This is typical of the long (60-day) session, and also in a session where power changed hands in the House.
If you are reading these updates for the first time, please know they are not meant to be a comprehensive look at every bill of interest to the business community. These summaries are going to highlight the bills that are most interesting, that are moving through the legislative process, and bills that may not be in the news or, if they are, they are presented here with more context.
This week, we start with something non-legislative – the Governor’s executive orders.
Gov. Youngkin issued a number of Executive Orders and Executive Directives after being sworn in last Saturday. Executive Order 6 starts the ball rolling on rescinding the Department of Labor and Industry’s very restrictive workplace safety standard implemented during the height of the pandemic. It does not automatically repeal the standard, but rather calls on the regulatory body to review the standard and related federal standards and report their findings to the Governor within 30 days, as well as review whether or not appropriate processes were followed in approving the standard. EO 6 also directs the Commonwealth’s agencies to focus regulatory enforcement on those regulations with the “least burden on our business and citizens.” Likewise, Executive Directive 1 in short calls for executive branch agencies to identify 25 percent of regulations not required by federal or state law to eliminate.
On legislation, this week there was not a lot of action as bills were continuing to get docketed. We have about 1900 total bills this session so far, and some are still trickling in. There are a few bills that the Chamber is watching that are likely to be consolidated soon, including bills on: limiting the Governor’s powers in a pandemic; reforming the Virginia Employment Commission; establishing association health plans (back after Gov. Northam’s vetoes); and potentially adopting some healthcare rules suspended or changed during the pandemic (in areas like telehealth, reciprocity of licensure, etc.).
Here are a few worth highlighting this week:
The Gas Tax
With Republicans in charge of the House and Gov. Youngkin making this a campaign pledge, there is likely going to need to be a compromise of some kind on the gas tax. The bills that have been introduced do different things – one removes the 2020 increase and replace it in a year and index it, another suspends the regional tax for a year. The universe of people who think the gas tax has a significant impact on the price at the pump is still large enough for these kinds of bills unfortunately. What it means for Northern Virginia is a loss in revenue for road and transit projects. We need more, not less, revenue for transportation improvements. There is still a $30-40 million hole at NVTA. It is unlikely these bills would make it far in the Senate. I would not be surprised to see some action from the Governor or the General Assembly to fill the hole with federal funding as outgoing Gov. Northam’s budget does for a portion of the lost revenue due to the grocery tax elimination meant for education.
Tax conformity and Paycheck Protection Program Expense Deductibility
There are a couple bills introduced that would extend the deductibility of PPP and Rebuild VA loans. In 2021, the Chamber joined with a number of organizations to allow for business expenses paid for with PPP loan proceeds to be deductible. The compromise reached in 2021 established a $100,000 deductibility threshold. I understand the goal of House Republicans and the Governor is to raise the threshold to $1M for 2020 loans and conform to federal rules for 2021 when some small second draw loans were made. This will take some effort in the Senate.
A bill introduced by Del. Lee Ware, working closely with representatives of the restaurant industry, would lower the amount of food and beverage tax that counties can impose from six percent to a total of four percent. Under the bill, a county is able to impose a food and beverage tax at up to two percent without restriction, but that would require approval via a referendum in order to impose the tax at four percent. The Chamber supports this limitation.
The Chamber met with the Senate patron, Sen. Mark Obenshain, early in the session to express our concerns about siphoning K-12 funding to establish charter schools. He understood the concern but assured me the way his bill is written That is because his bill only allows a regional charter school board to be established over 2-3 localities where one or more schools have failed accreditation in 2 of the last 3 years. This does not happen often in Northern Virginia (the City of Alexandria had 1 school fail to be accredited in 2015). We wouldn’t support per pupil funding declining in Northern Virginia. We do support innovation in education delivery, but the onus would be on the General Assembly to show how in fact charter schools are innovative.
Virginia is home to the largest data center market in the world. In order to keep growing in Virginia, these bills would establish a uniform taxing system to the taxation of data center infrastructure. Right now, localities take different approaches and some like Fairfax County tax them based on an estimate of the power capacity and utilization (i.e. the revenue a center can generate). The uniform system established in these bills would require localities to tax data centers based on the value of the infrastructure within the center, and that would then depreciate such as with other kinds of tangible property.
SB 251 Northern Virginia Transportation Authority; pedestrian and bicyclist projects.
The Chamber led the Virginia effort to get Metro’s dedicated funding in 2018, which unfortunately resulted in a loss of revenue for other projects in the region. Since then, the Chamber has been working with a number of partners to replace that money. This bill would dedicate funding for the Northern Virginia Transportation Authority to bike and pedestrian projects. This bill would be a terrible precedent by dedicating money to specific kinds of projects, something not done at the NVTA now, and ignores the reality that NVTA does in fact fund bike and pedestrian projects. The Authority funded more than $50 million in pedestrian only improvements during the last six-year program update. We are working with the patron and other transportation advocates to improve or eliminate this bill.
Paid Sick Leave and Leave Insurance
There are two bills again this session that would establish a universal paid sick leave mandate on Virginia businesses. They likely will not make it through the House this year.
Sen. Favola has brought back her bill to establish a private insurance market in Virginia for paid leave policies, after a study over the summer. The Chamber supports this bill and sees it as a way to incentivize businesses to adopt paid leave, and a more affordable and fair system for small businesess that may not be able to afford a self-funded program.
Other Interesting bills the Chamber is watching:
- HB565 – Del. O’Quinn: Advanced Manufacturing Talent Investment Program and Fund
- HB442 – Del. Murphy: G3 Tax Credit - $1000 per employee hired from G3 program
- HB191 – Del. Hodges: Health workforce development; Special Advisor to the Governor for Health Workforce Development; Virginia Health Workforce Development Fund.
- HB521 – Del. March: Business regulatory compliance; Sec. of Commerce and Trade to establish task force to study costs.
- HB1264 – Del. Filler-Corn: New Economy Workforce Credential Grant Program; eligible institutions; maximum reimbursement. Increases from $3,000 to $4,000 the maximum amount that the State Council of Higher Education for Virginia is permitted to reimburse to an eligible institution per completed noncredit workforce training program per eligible student pursuant to the New Economy Workforce Credential Grant Program.
- 2016 program reimburses institutions for training programs